Untouched – for now at least

From The Editor: Darin Tyson-Chan (Inaugural SMSF Association Trade Media Journalist of the Year)

This year’s federal budget was unique in a lot of ways. For a start, the accepted practices of the night were completely different. No lock-up for any of the recognised technical experts, nor sections of the media.

Everyone involved knew it would be a diff erent type of budget too, but still didn’t really know what to expect. In the end we got a budget with a heavy focus on repairing the economic damage the Australian economy has experienced as a result of COVID-19.

There were a few superannuation announcements, being the YourSuper performance assessing requirement for MySuper funds and the change to allow employees to have one retirement savings fund ‘stapled’ to them throughout their working life. Neither was directly related to SMSFs.

So, not much really to talk about when it comes to this sector or is there? As to be expected, analysis of the budget still had to be performed and this process has led to some interesting takes on what these minor announcements might mean for the sector.

To this end, there has been speculation the new YourSuper benchmarking regime could actually benefit the appeal of SMSFs as they could end up representing the only retirement savings structure with the ability to truly deliver high returns as they will not be constrained by performance measures.

But this is an uncommonly optimistic view of the situation. In the main, most of the industry’s take on the budget has been with an expectation of more pain or negative consequences.

Evidence being the feeling that the YourSuper initiative could actually end up curtailing the instances where an adviser would be comfortable recommending a client establish an SMSF due to the best interest duty. The concern being whether they could guarantee running an SMSF would be in the client’s best interest should it not be able to outperform MySuper funds.

Other respected sector experts have suggested performance benchmarking will begin with MySuper funds and will eventually be applied to SMSFs.

And even before the budget was handed down there was speculation by more than one quarter that the pot of gold that is superannuation, and in particular SMSFs, will be used as a fiscal lever to repair the once-ina-lifetime deficit society will have to eventually address.

Yes this is all guesswork at the moment, but if our politicians were smart, they would be monitoring all of these reactions. Why? Because it all lends itself to the worrying phenomenon of regulation and political risk being the most concerning factors in the country’s superannuation framework.

Just about every reaction to the budget has been negative with respect to what might come next and that’s regarding a budget with no significant superannuation changes in it.

But Canberra shouldn’t just take the word of practitioners working in the space. As reported by selfmanagedsuper in September, 51 per cent of respondents to an Investment Trends survey of SMSF trustees said changes to the rules and regulations governing superannuation is the main source of their concerns.

This all points to a mood that there is too much legislative change to the retirement savings system and it is time our politicians sat up and took notice.

Every SMSF stakeholder is pleased the sector was left alone in this year’s budget, but they are all wary about what’s around the corner that might be coming their way.